IPPNY: DEC’s RGGI Pre-Proposal ‘Myopic’

December 7, 2006

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New York State Department of Environmental Conservation has released a preliminary draft set of rules to implement the Regional Greenhouse Gas Initiative in New York which includes the auction of 100 percent of emissions allowances. Comments are due by January 12.

RGGI is a market-based cap-and-trade program to reduce carbon dioxide emissions from power plants in the Northeast, and the first of its kind in the U.S.. Other states that have agreed to take part in the program include Connecticut, Delaware, New Hampshire, New Jersey, Maine, and Vermont.

The Independent Power Producers of New York have objected to the pre-proposal, describing the measure as bad for consumers and threatening the reliability of New York’s electric system.

“DEC’s myopic pre-proposal neglects the impacts that it will have on the cost and availability of power to New York’s residents and businesses and is the epitome of putting the cart before the horse,” said Gavin Donohue, President and CEO of IPPNY. “Before a regulatory body proposes a 100 percent auction of allowances for generators -? an approach not tried anywhere in the country -? it first must study and fully understand the impact of such a process. Cost and reliability impacts on electricity supply are not something DEC should be gambling with.”

The proposal would begin taking effect in 2009, with emissions of carbon dioxide from power plants in the region being capped at current levels approximately 121 million tons annually and with this cap remaining in place until 2015. The states would then begin reducing emissions incrementally over a four-year period to achieve a 10 percent reduction by 2019.

Under the cap-and-trade program, New York will issue one allowance, or permit, for each ton of CO2 emissions allowed by the cap. Each plant will be required to have enough allowances to cover its reported emissions. The plants may buy or sell allowances, but an individual plant’s emissions cannot exceed the amount of allowances it possesses. The total amount of the allowances will be equal to the emissions cap for the region with a capacity of 25 megawatts or more will be included under RGGI.

New York’s preliminary draft rule announced today also includes the auction of 100 percent of emissions allowances.The emissions allowances would be sold on the open market.

Comments on the preliminary draft rule are due by January 12, 2007, and can be emailed to nyrggi@gw.dec.state.ny.us. DEC will also be holding two public meetings at which comments can be submitted. They will be held on December 14, 2006, and January 12, 2007, from 10 a.m. to 12 p.m. at DEC’s Headquarters, Room 129A, 625 Broadway, Albany. Those planning to attend these meetings must pre-register at nyrggi@gw.dec.state.ny.us.

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